FINANCIAL AWARENESS QUIZ 6 for SEBI and Other Regulatory Body Exams

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1. Money is

the income a person earns over a period of time.

a person’s assets net of liabilities at any point in time.

a liability that people are willing to accept in exchange for goods and services.

an asset that people are generally willing to accept in exchange for goods and services.

None of the above

2. The problem with barter economies is that they require

that there be a double coincidence of wants.

a banking system for trade to occur.

that there be a single coincidence of wants.

less time and trouble to trade as compared with a money economy.

None of the above

In World War II, cigarettes were used as money in some prisoner of war camps. Given this, we would expect to

prices of other goods expressed in terms of cigarettes.

people bartering instead of using cigarettes as money.

only government-issued cigarettes being accepted as money.

no one ever smoking cigarettes in the prisoner of war camps.

None of the above

The statement ‘a Dell laptop costs $2500′ illustrates which function of money?

Store of value

Medium of exchange

Standard of deferred payment

Unit of account

None of the above

If you save $3000 for a deposit on a new car, you are using money as a

standard of deferred payment.

store of value.

medium of exchange.

unit of account.

None of the above

A unit of account is

an asset that can be used to transport purchasing power from one period of time to another.

a standard unit that provides a consistent way of quoting prices.

the ability to buy something today but to defer payment to the future.

what sellers generally accept and buyers generally use to pay for goods and services.

None of the above

If Thrifty Bank receives a $10 000 deposit, and keeps 10% of its deposits in reserve, how much will the bank loan

$1000

$9000

$11 000

$10 000

None of the above

Suppose you deposit $2000 into a bank that has a reserve ratio of 0.1. How does this affect the bank’s balance

Reserves rise by $200.

Excess reserves rise by $1800.

Required reserves rise by $2000.

Deposits rise by $1000.

None of the above

Banks can increase the money supply by

making loans that result in additional deposits.

printing additional currency notes.

paying interest to their depositors.

offering financial services, such as money market accounts.

None of the above

10.

Given a required reserve ratio of 20 percent, a bank having no excess reserves, can make additional loans of _________ after receiving a new deposit of $100.

$80

$20

$400

None of the above